natural gas futures rose to a nine-month high on Monday, on forecasts for continued above-normal temperatures across most parts of the U.S. throughout most of summer.
The National Weather Service’s most recent three-month outlook showed above-average temperatures for nearly the entire country. It predicts far above-average temperatures for the West, the Northeast and the Southeast.
Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early summer cooling demand.
Natural gas for delivery in July on the New York Mercantile Exchange rose to an intraday peak of $2.689 per million British thermal units, the most since September 16. It last stood at $2.687 by 14:25GMT, or 10:25AM ET, up 6.4 cents, or 2.44%.
Meanwhile, traders looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the fuel.
The U.S. Energy Information Administration''''s storage report slated for release on Thursday is expected to show a build in a range between 55 to 66 billion cubic feet for the week ending June 17.
That compared with builds of 69 billion cubic feet in the prior week, 73 billion a year earlier and a five-year average of 88 billion cubic feet.
Total U.S. natural gas storage stood at 3.041 trillion cubic feet, 20.8% higher than levels at this time a year ago and 23.2% above the five-year average for this time of year.
Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.
Natural gas prices are up nearly 40% since falling to a 17-year low of $1.611 in early March on expectations of strong summer weather-driven demand for gas-fired electricity generation to meet air-conditioning needs.
Gas use typically hits a seasonal low with spring''''s mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.
Elsewhere on the Nymex, crude oil for delivery in August rose 93 cents, or 1.92%, to trade at $49.49 a barrel, while heating oil for July delivery increased 1.83% to trade at $1.508 per gallon.